New Zealand’s Health & Safety at Work Act (HSAW) came into effect on 4 April 2016 as part of reforms to the country’s health and safety system which aim to reduce the workplace injury and death toll by 25% by 2020. When it was introduced, on average one person a week was dying at work and 15 were dying from work-related diseases.

From 2008 – 2013 there were:

133,887 severe injuries (1 in every 100 employees)

1,160,786 non-severe injuries (1 in every 10 employees)

These rates were 3 times higher than the UK and nearly twice as high as Australia.

The new Act is similar to legislation introduced in Australia which successfully reduced the number of workplace injuries. It introduces a new threshold where there is a presumption in favour of safety ahead of cost, unless the cost is grossly disproportionate to the risk. This represents a shift from monitoring and recording health and safety incidents to proactively identifying and managing risks. It broadens the scope of who is responsible for health and safety and introduces much tougher penalties for non-compliance.

HSAW has five key concepts:

Business responsibilities

Senior leader responsibilities

Working with other businesses

Worker responsibilities

Worker participation.

The main changes for businesses:

It introduced the concept of PCBUs – person conducting a business or undertaking – to capture all types of modern working arrangements including sole traders, self-employed, remote workers, subcontractors, apprentices and volunteers;

Every PCBU must look after the health and safety of workers, any other workers they influence or direct and other people at risk from the work they carry out e.g. customers, visitors or the public;

Senior leaders who influence the management of a business (an officer) must conduct due diligence to make sure the business understands and manages its key risks;

When the work of two or more businesses overlap, they must consult, co-operate and co-ordinate activities to meet their health and safety responsibilities to workers and others;

Businesses must engage with their workers on health and safety, ideally via health and safety representatives and committees.

How has it been enforced?

WorkSafe (the agency responsible for monitoring health and safety) inspectors can inspect a business at any time and can issue notices without an incident having taken place. Fines have increased significantly for non-compliance and there is now personal liability on officers.

Inspectors now have the power to issue:

An improvement notice, requiring a PCBU to take steps to prevent a breach of the legislation or to remedy a current breach, non-compliance with which can result in a fine of up to $250,000 for a company or $50,000 for an individual;

A prohibition notice, prohibiting the carrying on of an activity that involves a serious risk to a person’s health and safety, where non-compliance can result in a fine of up to $500,000 for a company or $100,000 for an individual;

A non-disturbance notice, requiring a site to be preserved, both where a notifiable event has occurred and in other circumstances, where a company can be fined up to $250,000 and an individual up to $50,000 for non-compliance;

An infringement notice – an instant fine for breaching obligations or for failing to address an issue that has been previously identified.

For more serious breaches of the legislation, WorkSafe can prosecute a duty holder. If a prosecution for a breach is successful, the court can impose a range of penalties, including:

Fines, which can vary depending on the actual breach, up to a maximum of $300,000 for an individual, $600,000 for an officer, and $3,000,000 for a PCBU;

Reparation payable to a person injured by a breach;

Costs payable to WorkSafe;

Adverse publicity orders;

Orders for restoration, to require an offender to take specified steps to fix a problem;

Project orders, requiring the offender to undertake a specified project to improve health and safety;

Injunctions, to either stop or require specific conduct of the offender;

Training orders.

What impact has HSAW had?

As with all new legislation it takes time to bed in, especially when you are trying make cultural changes and as yet there are no figures available for number of WorkSafe inspections or fines under the new regime.

The role of insurance

Companies can purchase a Statutory Liability policy to cover the legal costs to defend a regulatory action (such as a health and safety investigation). It will cover the actions of both companies and directors but not the cost of any fines.

Businesses should consider whether they want to purchase a statutory liability policy or whether they’d like to increase the limit of indemnity they have already have. Defending a prosecution can be expensive and time-consuming, and if they had previously bought the policy as a bolt-on to other insurance, they may find they are now underinsured as the legislation has broadened the scope of who can face prosecution and imposed tougher penalties.